The Supreme Court on Wednesday issued notice on a PIL seeking directions to the Centre to have a mechanism to track total GST paid on the OIDAR (Online Information and Database Access or Retrieval Services) services used by Non NTOR (Non-Taxable Online Recipient) Indian recipients under reverse charge basis.
The three-judge bench of Chief Justice S.A. Bobde, Justices A.S. Bopanna and V. Ramasubramanian has issued notice to the Centre on a plea which also seeks to amend GSTR-5A or introduce a new form to reflect in the GST return figures of revenue generated out of services to NTOR.
The petitioner, Pradeep Goyal, has further sought directions to the Centre to have a mechanism to verify the total receipts earned by foreign online service providers from India and check GST compliance.
The petitioner has contended that the Government has no mechanism to track total GST paid on the OIDAR services used by Non NTOR Indian recipients under reverse charge basis. The petitioner has further said that figures of revenue generated out of services provided to Non NTORs is not reported anywhere in GST returns. As most of the overseas service providers maintain their accounts in foreign jurisdiction and are audited as per the local laws of the Country in which they are situated, the Indian Government has no mechanism to verify the total receipts earned by these service providers from India and Check GST compliance’s, he said.
He said foreign OIDAR service providers such as Facebook Inc, Twitter Inc, Google etc. are earning huge revenues from Indian customers. However, the administration of the provisions of the Act is a cause of concern. For example, Amazon Web Services, Inc is established in the United States and has a large consumer base in India. IGST is payable on sales to non-business consumers in India. Accordingly, the company requires users of its services for business purposes and who are GST registered to provide the businesses GSTIN and address to which the GSTIN is registered. This ensures that IGST is not charged from such businesses on their purchase from Amazon web services inc. In all other cases, IGST is charged on making purchase on the Amazon Web Service Marketplace.
Through his petition, he has also prayed for direction to overseas service providers to have fixed establishment in India or allow the Indian authorities to have no control or access to their accounting records in order to verify their compliance under GST laws.
The plea also sought directions to have strong mechanism for overseas OIDAR like it has for others by which there is strong tax collection, compliance and reporting mechanism through various type of periodical returns, GST audit from independent auditors and also other machinery provisions.
Further, it sought direction to the GST authorities to provide data as to how many persons located in a non-taxable territory are providing OIDAR services in India.